Empowering consumers: The implications of the Digital Identity Regulation for the financial sector
All the Commission's recent initiatives in the financial sector aim towards a common objective: to empower EU financial sector customers with greater control over their data, thereby allowing them access to a broader range of data-driven services beyond payments. A key component of this vision is the Financial Data Access Regulation (FIDA), which is designed to achieve the objective of empowering customers.
The revision of the EU Digital Identity scheme that recently took place and entered into force on May 20 is another initiative in the same direction. It is designed to provide citizens and residents with security and control, whilst ensuring full confidence in managing access to their digital identities and the data shared. Achieving this ambitious goal requires a high level of security across all aspects of digital identity provisions, including the issuance of a European Digital Identity Wallet, and the infrastructure for the collection, storage, and disclosure of digital identity data. All in all, the Scheme is designed to:
- Make online services safer and easier to use across Europe.
- Provide customers with better control over their data and privacy, while respecting user anonymity.
But first things first: What is the Digital Identity Wallet?
The European Digital Identity Wallet is an electronic identification that allows users to securely store, manage, and validate a person’s identification data.
Participation in the EU wallet will be voluntary, with safeguards in place to uphold citizens’ rights and foster digital inclusivity. These measures aim to prevent discrimination against individuals who choose not to use it. Moreover, the EU Digital Identity Wallet provides a secure means of accessing an individual's social security information and benefits, such as retirement pension or disability benefits.
Why is it important?
The European Digital Identity Wallet will allow citizens to share data securely in a user-friendly and convenient way.
The widespread availability and functionality of European Digital Identity Wallets will significantly enhance trust and acceptance among both individuals and private service providers. This increased trust will pave the way for private entities, particularly in sectors like banking and financial services, to make use of these wallets for services that require strong user authentication for online identification.
The progress in developing the Digital Identity Wallet is laying the groundwork for the Financial Data Access (FIDA) Regulation. These regulations are interlinked due to the fact that they combine market innovation and serve the customers’ interests. Their close relationship comes from their shared goal of increasing customer trust in digital services through enhanced data security.
Looking forward, leveraging the Digital Wallet architecture and its new standards, customers would have the option to manage all their data-sharing permissions in a single application. A Digital Identity Wallet, which would also store their credentials, would ensure the highest level of security.
Next steps.
By 21 November 2024, the Commission will unveil a comprehensive list of reference standards and procedures for implementing the European Digital Identity Wallet, as well as streamlining the onboarding process for users to the European Digital Identity Wallet.
Once these requirements are in place, each Member State will have 24 months to offer at least one European Digital Identity Wallet, ensuring seamless access for all citizens and residents.
At Insurely, we look forward to seeing how these new rules will be implemented and welcomed by the consumers.
